Message Boards Digest

September 22, 2021

Here are the most recently added topics on the BenefitsLink Message Boards:

PS created a topic in Plan Terminations

Plan Sponsor's Name Change

"A terminating plan has been advised by counsel to have its company name changed as of the effective termination date. Will this require an amendment? They want the 5500 and all filing to be done with the new company name."

2 replies so far   |    Click Here to Add a Reply

TRDriver created a topic in 401(k) Plans

Moving Participants from One Plan to Another Plan Sponsored by Same Employer

"While I know there is opinion that separating a 401(k) plan into two plans solely to avoid large plan/audit status may not be an acceptable reason to create a second plan, we did this for a client several years back.

In 2012 we spun off to a new plan those hired on or after 1/1/2011. Those hired before 1/1/2011 remained in the existing plan.

We have tested the two plans together in all years (they are ADP/ACP tested plans with all of the same provisions).

We are now to the point where the second plan is reaching large plan status. The client asked if we could split that plan into a third plan, but I told them I didn't think that was a good idea. Instead, we are exploring the idea of 'rebalancing' the two existing plans, changing the plan eligibility from the 1/1/2011 hire date to a 1/1/2019 hire date. In essence, we would be moving all those hired between 2011 and 2018 from the second plan to the first plan, which would reduce the count in the second plan thereby allowing it to grow again.

Has anyone ever done anything like this? The recordkeeper for the plans (Empower) is saying they would simply do a plan to plan transfer (since it's one company) and so no black out notice would be needed, but I feel like it is a bit more involved than that. Any thoughts/advice would be greatly appreciated. Thanks in advance."

4 replies so far   |    Click Here to Add a Reply

Rob created a topic in Retirement Plans in General

How Do Insurance Policy Cash Values Affect the Required Minimum Distribution from a Profit Sharing Plan?

"Are cash values in a profit sharing plan used in the calculation of a required minimum distribution? I have paid my PS58 costs each year."

3 replies so far   |    Click Here to Add a Reply

Danny CPA created a topic in 401(k) Plans

Deducting More Than 415 Limit on Partner's 1040

"Plan sponsor is a partnership with a cross-tested profit sharing plan.

We received the K-1s for 2020, which only had Guaranteed Payments subject to Self-Employment Taxes in Box 14A.

For one of the partners, he was limited (to pass testing) to a profit sharing of $20,000 (Box 14A was only a little over $100K).

We just found out (after the September 15th deadline), that the K-1s were in error, and he should have had over $300,000 in Box 14A. They are filing an amended 1065.

He would like to put in the full $57,000 for 2020 (an additional $37,000 contribution).

He can still put in the additional $37,000 for 2020 since it is still within the time frame for a 2020 annual addition, but he cannot deduct this on his 2020 1040, but could on his 2021 1040. However, the next question is if he wants to do the maximum in 2021 ($58,000), can he deduct the full $95,000 ($37,000 for 2020 plus $58,000 for 2021) on his 2021 Form 1040, or would that be limited to $58,000 only?

I tend to believe the answer is yes, he would get the full deduction in 2021-- but I am struggling to find support for that position. He isn't violating the 415 limits or the maximum tax deductible contribution for the plan. Thoughts/support for that position?"

2 replies so far   |    Click Here to Add a Reply

Ananda created a topic in Form 5500

Form 5500 and Conversion From Single Employer to Multiple Employer Plan

"A 401(k) plan is a single employer plan and filed Form 5500s as such. Mid-year 2019 the plan selects a multiple employer plan provider and converts to become a participant in a multiple employer plan. The Lead employer that sponsors the multiple employer plan files a full year 2019 Form 5500, and this 401(k) plan is listed as a participating plan. While the IRS received a single plan Form 5500 from this 401(k) Plan in 2018, they are asking why no 5500 was filed for 2019. Thus, we are sending them the multiple employer plan Form 5500 that was filed for 2019. Is this enough? Or does the plan need to file a short year 5500 for 2019 for the months it existed as a single employer plan and use the DOL DFVCP to correct this apparent filing error?"

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